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Update: PNM resource plan, including coal plant closure, approved in New Mexico

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Update: PNM resource plan, including coal plant closure, approved in New Mexico

New Mexico utility regulators approved a PNM Resources Inc. utility's long-term plan for power generation and delivery, including retiring the remaining units at the San Juan Generating Station by the end of 2022.

The state Public Regulation Commission on Dec. 19 also granted PNM utility subsidiary Public Service Co. of New Mexico permission to join the California ISO's Western Energy Imbalance Market in 2021.

The market arrangement will help PNM carry out the long-term integrated resource plan, or IRP, and its renewable energy plan by expanding opportunities for PNM to integrate additional renewable energy into its service territory. Through coordination with other members in the market across the western U.S., PNM said it will be able to use more renewable resources in New Mexico.

For example, when renewable energy production on PNM's system exceeds the amounts its customers need, PNM will be able to sell the excess energy to other market participants and reduce costs to its own customers with proceeds from the sales, the company said in a news release.

The commission approved PNM's 2019 Renewable Energy Act Plan on Nov. 29, which allows the utility to include previously approved wind, solar and geothermal energy additions in customer rates. The additions include 50 MW of solar facilities built this year.

PNM said it plans to serve its customers with 874 MW of existing and future solar, wind and geothermal resources by 2021.

SNL Image

San Juan Generating Station

Source: Electric Light & Power

On Dec. 19, the five-member commission unanimously accepted the IRP that PNM filed in July 2017 that includes plans to eliminate its coal-fired generation. In addition to retiring units 1 and 4 at the San Juan plant, totaling 847 MW, by the end of 2022, PNM plans to quit its 13% participation, totaling 200 MW, in the Four Corners power plant when an existing coal supply agreement expires in 2031.

Two other units at the San Juan plant, which began operating in 1973, have already been retired. The plant's coal supply comes from Westmoreland Coal Co.'s San Juan Mine 1, according to S&P Global Market Intelligence data.

In addition to expanded use of solar and wind energy, PNM said it plans to explore the potential for energy storage capacity as well as purchasing replacement power to support its load growth over the 20-year planning period. Nearly 70% of PNM's energy will come from emissions-free resources by 2032, according to the plan.

PNM said it expects to make a compliance filing before the end of 2018 concerning the future of the San Juan plant as a condition of a previous settlement.

The commission rejected a last-ditch effort by San Juan County, the city of Farmington, N.M., and some local state legislators to block PNM's plans to close the San Juan plant. The parties on Nov. 8 filed exceptions to the hearing examiner's recommended approval of the IRP, arguing that economic impacts of the closure will be devastating. The parties said lost revenues to the state will amount to $1.5 billion, at the rate of $50 million annually, because the plant has a useful life through 2053.

PNM determined the plant was too expensive to continue operating, especially considering cheaper energy alternatives.